On August 6, 2024, Aris Water Solutions Inc (ARIS, Financial) released its 8-K filing detailing the financial results for the second quarter of 2024. Aris Water Solutions Inc is an environmental infrastructure and solutions company that helps customers reduce their water and carbon footprints through its Produced Water Handling and Water Solutions businesses.
Performance and Challenges
Aris Water Solutions Inc (ARIS, Financial) reported a net income of $13.1 million for Q2 2024, an increase from $10.4 million in Q2 2023 but a decrease from $16.8 million in Q1 2024. The company’s revenue for the quarter was $101.1 million, surpassing the analyst estimate of $96.92 million. However, the company faced a slight decline in total volumes handled, which decreased by 4% compared to Q1 2024 and 3% compared to Q2 2023.
Financial Achievements
Aris Water Solutions Inc (ARIS, Financial) achieved an Adjusted EBITDA of $50.0 million for Q2 2024, up 17% from $42.6 million in Q2 2023. The company’s gross margin per barrel increased to $0.31 from $0.24 in the same period last year. These achievements are crucial for the company as they indicate improved operational efficiency and profitability in the Utilities - Regulated industry.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | Q1 2024 |
|---|---|---|---|
| Net Income | $13.1 million | $10.4 million | $16.8 million |
| Adjusted EBITDA | $50.0 million | $42.6 million | $53.1 million |
| Gross Margin per Barrel | $0.31 | $0.24 | $0.32 |
Balance Sheet and Cash Flow
As of June 30, 2024, Aris Water Solutions Inc (ARIS, Financial) had net debt of approximately $438 million, with $12 million in cash and $299 million available under its revolving credit facility. The company’s leverage ratio stood at 2.2X, below its target range of 2.5X – 3.5X. Capital expenditures for the quarter totaled approximately $37 million, down from $49 million in Q2 2023.
Commentary and Future Outlook
“Aris had a strong second quarter as resilient produced water volumes and operating margins combined to deliver outstanding results. Our customers are steadily growing their production and associated water volumes in our dedicated acreage, and we are pleased with how well Aris has performed to date this year,” said Amanda Brock, President and CEO of Aris.
“Given our strong first half of 2024 and increased confidence in the outlook for the second half of the year, we are increasing our full year 2024 Adjusted EBITDA guidance, establishing a new range between $195 and $205 million,” added Brock.
Analysis
Aris Water Solutions Inc (ARIS, Financial) has demonstrated robust financial performance in Q2 2024, driven by resilient produced water volumes and improved operating margins. The company's ability to exceed revenue estimates and maintain strong EBITDA growth highlights its operational efficiency and strategic positioning in the market. However, the slight decline in total volumes handled and net income compared to the previous quarter indicates potential challenges in sustaining growth momentum. The company's focus on capital efficiencies and free cash flow generation will be crucial in navigating these challenges and driving future growth.
Explore the complete 8-K earnings release (here) from Aris Water Solutions Inc for further details.
